The recession is putting banks through their worst trauma since the 1930s; the crisis could finally force Washington to overhaul the U.S. financial system

Guards posted outside dozens of shuttered financial offices in Rhode Island last week were ominous portents for the troubled U.S. banking industry. Only ) hours after he was sworn in on New Year's Day, Governor Bruce Sundlun shut down 45 banks and credit unions to prevent a run on deposits in the wake of the collapse of the private firm that insured them. While such private insurance has become a rarity, the closings aggravated the growing anxiety about the health of the entire financial system, as the U.S., already reeling from the savings and loan debacle, sinks into a new recession.